FX November 30, 2022 / 10:02 am UTC

FX Daily Strategy: N America, November 30th

By Adrian Schmidt

Softer EZ CPI expected but limited reaction seen

Equity market tone to dominate the EUR and AUD tone

US ADP data may weigh on the USD

CAD has scope to recover after stronger GDP on Tuesday

Softer EZ CPI expected but limited reaction seen

Equity market tone to dominate the EUR and AUD tone

US ADP data may weigh on the USD

CAD has scope to recover after stronger GDP on Tuesday


Eurozone CPI data for November looks like the most significant data on Wednesday, but after the weaker than expected German and Spanish CPI on Tuesday, it would be a big surprise if there wasn’t a dip in the y/y rate below the surveyed consensus of 10.4% y/y. But the impact on the EUR looks unlikely to be large. European yields fell back on Tuesday after the weaker than expected Spanish and German data, but this didn’t have much impact on the EUR, which was fairly steady on most crosses but fell back against a generally stronger USD. Once again, the USD is benefitting from a more negative risk tone, although the decline in equities has been quite modest, and softer CPI in Europe and the implication of less monetary tightening is likely, if anything, to be supportive for equities, and consequently for the EUR. Although yield spreads moved in the USD’s favour on Tuesday, there hasn’t been a great deal of movement in spreads of late, and risk sentiment has dominated. Thus is likely to remain the case in the short term, and we would favour modest EUR upside within the 1.0225-1.0495 range seen in the last few weeks. 

Before the Eurozone CPI data there was Australian CPI data for October, but AUD/USD is, if anything, more dominated by risk sentiment than EUR/USD, with AUD/USD mirroring the moves in the S and P 500 in the last couple of months. The numbers came in weaker than expected, but there wasnlt much AUD reaction. 

There is revised Q3 GDP from the US, but there is likely to be more focus on the ADP employment report, even though its relevance for the official numbers on Friday is debatable. We expect a 150k increase in November’s ADP estimate of private sector job growth and an upward revision to Q3 GDP to 3.0% from 2.6%. Our ADP forecast is below the market expectation of 200k, so the risks look to be USD negative, even though we see a stronger GDP number. 


Generally the USD managed gains early on Tuesday, but fell back as the equity market recovered. The exception was USD/CAD, which remained well bid through the day in spite of stronger than expected Canadian GDP data. The 2.9% annualized increase in Q3 GDP was well above the 1.5% consensus that matched a BoC forecast made with October’s Monetary Policy report, and while the details were less impressive, it did trigger a modest rise in CAD yields. The CAD looks to have scope to play catch-up and recover some ground against the USD. 


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I, Adrian Schmidt, the lead analyst declare that the views expressed herein are mine and are clear, fair and not misleading at the time of publication. They have not been influenced by any relationship, either a personal relationship of mine or a relationship of the firm, to any entity described or referred to herein nor to any client of Continuum Economics nor has any inducement been received in relation to those views. I further declare that in the preparation and publication of this report I have at all times followed all relevant Continuum Economics compliance protocols including those reasonably seeking to prevent the receipt or misuse of material non-public information.